Correlation Between Ford and Fmasx
Can any of the company-specific risk be diversified away by investing in both Ford and Fmasx at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ford and Fmasx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Fmasx, you can compare the effects of market volatilities on Ford and Fmasx and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ford with a short position of Fmasx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Fmasx.
Diversification Opportunities for Ford and Fmasx
Poor diversification
The 3 months correlation between Ford and Fmasx is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Fmasx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fmasx and Ford is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ford Motor are associated (or correlated) with Fmasx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fmasx has no effect on the direction of Ford i.e., Ford and Fmasx go up and down completely randomly.
Pair Corralation between Ford and Fmasx
If you would invest 0.00 in Fmasx on November 5, 2024 and sell it today you would earn a total of 0.00 from holding Fmasx or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.2% |
| Values | Daily Returns |
Ford Motor vs. Fmasx
Performance |
| Timeline |
| Ford Motor |
| Fmasx |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Ford and Fmasx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Fmasx
The main advantage of trading using opposite Ford and Fmasx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Fmasx can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fmasx will offset losses from the drop in Fmasx's long position.The idea behind Ford Motor and Fmasx pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Fmasx vs. Ab Bond Inflation | Fmasx vs. Tiaa Cref Inflation Link | Fmasx vs. Guidepath Managed Futures | Fmasx vs. Tiaa Cref Inflation Linked Bond |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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